April 23, 2007
Hugh MacLeod asks, if open source is so great, where are all the open source billionaires?
If Open Source software is free, then why bother spending money on Microsoft Partner stuff? I already know what Microsoft's detractors will say: "There's no reason whatsoever. $40 billion per year is totally wasted."
This, however is not a very satisfying answer, simply because it doesn't quite ring true. Otherwise there'd be a lot more famous Open Source billionaires out there, being written up in Forbes Magazine or wherever. And Bill Gates would've been ousted years ago.
I can immediately think of one reason there aren't any open-source billionaires:
Most competition for open source software comes from other open source software. It's far more cutthroat than the commercial software market could ever be.
Rajesh Setty responded to Hugh's question with a few additional reasons why it's difficult for open source businesses to make money:
If open source is license free, the costs have to be low to work with open source. If cost is one of the reasons for a customer to embrace open source, he or she will pay less than what they would have paid to a comparable enterprise software to do the same job. An open source company would have to therefore work twice as hard to a comparable enterprise software company to make the same or less amount of money. This means that they have to have a lot more resources than the competing enterprise software company. How can you have a smaller pie but feed a lot more people and still keep everyone happy?
But I think MacLeod is asking the wrong question, so Setty's answers, although well reasoned, are irrelevant. There probably won't ever be any open source billionaires. Just ask JBoss founder Marc Fleury:
To do [open source software] seriously, professionally, in a sustainable fashion you need to make a living. What is clearly compromised is the "instant billionaire" club. I remember the first time I saw Torvalds on a panel and someone asked "why isn't there an open source billionaire", and I immediately thought "because you are distributing FREE SOFTWARE, dummy." And there still isn't an open source billionaire today. There are very few billionaires period. Your average MSFT developer certainly isn't one.
I for one don't believe there will ever be an open source billionaires club. There are and will be many multi-millionaires though. If we execute on our plan without screwing up, we will create a large batch of OS millionaires. We care about the developers and people who create real value in companies getting rewarded.
The lack of open source software billionaires is by design. It's part of the intent of open source software -- to balance the scales by devaluing the obscene profit margins that exist in the commercial software business. Duplicating software is about as close to legally printing money as a company can get; profit margins regularly exceed 80 percent.
To ask where the open source billionaires are is to demonstrate a profound misunderstanding of how open source software works. If you wanted to become obscenely rich by starting an open source software company, I'm sorry, but you picked the wrong industry. You'll make a living, perhaps even a lucrative one. But you won't become Bill Gates rich, or Paul Allen rich, by siphoning away the exorbitant profit margins commercial software vendors have enjoyed for so many years.
But there is a silver lining.
There are real millionaires-- even billionaires-- who built companies on open source software. Just ask Larry Page and Sergey Brin. Or the YouTube founders. The real money isn't in the software. It's in the service you build with that software.
Posted by Jeff Atwood
Google's got no products besides AdWords? Now where on earth did you get this idea?
Search (and all of the analytics behind it)
Analytics, aka Urchin
These are hugely valuable things, all the more so for being available ubiquitously free of charge. But that doesn't mean there ain't money in them there hills for those digging with neural net AI tools behind the scenes. And don't think that isn't exactly what they're doing.
Most comments are forgetting the difference between making a living and being a billionaire.
The question here is not about whether Open Software is good; nor about whether you should USE Open Software. Yes, Google makes big bucks USING Open Software. But their market cap is based on their CLOSED software. If Google were to make their search software open, they would crater... Microsoft would have an equivalent search engine tomorrow... and they would charge less for ads... and they would add integration to their service and their Office products to funnel their user base to their search service. Hence Google makes money by developing CLOSED software; they reduce costs by leveraging Open Software.
There are various other statements about making money on services; or making money by building on Open Software. Great! But my question is: Can you make good money DEVELOPING open software? Not much. In the end, open software de-values software... and thus de-values software engineering services. Open Software is a nice gift to the world! Open Software is a great way for a COMMUNITY to develop out some shared software components. But in general, if you want to make good money developing software, you're not going to do it with Open Software.
I will agree with many of the comments in this regard: This blog posting is asking the wrong question... the issue is NOT that you can't make billions developing Open Source software. Realistically, you can't make billions developing ANY kind of software. Billions come a different way.
The better questions are these:
If you are a really good software developer and you want to be part of a team of 50 really good software developers that make $500K/year salaries developing really cool software... can you do it by developing Open Source?
No, sorry, can't happen. It can happen by USING Open Source, but you need to be developing a CLOSED Source product if you want to be able to make good money. Open Source commoditizes software; and thus minimizes the value of software development of that software; and thus minimizes the salaries of software developers. That's great for people who want to make money USING software; not so good for people who want to make money DEVELOPING software.
thank you for all the info
ITS NOT ABOUT THE MONEY, for crying out loud. its about doing something worth doing.
christ, some people just don't get it.
The dumbest premise I've seen in a while: if it's good, then producing it will create billionaires. Two factors create billionaires (I mean, out of making things, not inheritance or outright theft like poor-country dictators): marketing and poor distribution of incomes. At Japanese companies like Toyota, the CEO makes something like 20 or 25 times the average worker, at most (and without gigantic, backdated stock options) In most of the world it is regarded as absurd and disgusting to pay enough to create executive billionaires. It is no measure of the value of what's produced when a company manipulates the market to keep prices high with the goal of padding the pockets of billionaire executives.
Open source is so huge directly because of software patents
It's pure irony, but people turn to open source precisely because software patents prevent them from doing what they wanted to, so open source will remain very strong competition to proprietary software, but only as long as software patents are in place.
Most open source projects are not sued because they have no money and its therefore pointless. Also they have hundreds of developers working on each project who can write work arounds to patents as necessary - something a small development team would find very hard.
If/when software patents go, individuals and small groups of developers will again have the ability to write innovative products and sell them without the fear of being sued.
"There probably won't ever be any open source billionaires."
But that's not really a bad thing, is it?
Anybody wanna bet that Steve Balmer couldn't write even 100 lines of Python?
"It's far more cutthroat than the commercial software market could ever be. "
This makes better software.
Think about it: if Linux became popular overnight, what would happen to Microsoft and Apple?
Or what would happen if people could fork the Windows/OSX codebase?
Or what would happen if there were only 2 Linux distros?
I think main problem we face in open source is we need lot of Developer resources in order to customize it as per Business requirements. As a Founder of the company initially I would looking to generate more revenue rather than investing on resources for open source development. Even though commercial software like Microsoft is expensive still would go for that rather than spending more on Developing Open source. As the in the most cases results are not predictable.
I also completely agree with Rajesh reply Use of commercial software than Open source in Industries “If cost is one of the reasons for a customer to embrace open source, he or she will pay less than what they would have paid to comparable enterprise software to do the same job. An open source company would have to therefore work twice as hard to a comparable enterprise software company to make the same or less amount of money. This means that they have to have a lot more resources than the competing enterprise software company. How can you have a smaller pie but feed a lot more people and still keep everyone happy? “
Open source is basically an evil trick. It has many drawbacks no one talks about. It is not that easy to become more famous or a billionaires with Open Source.
I clicked the image to get an enlarged view. But the link says "404 File not found". Re-up please.